##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 Annual Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
 For the Fiscal Year Ended: December 31, 2008
 Commission File No. 0-50764
 CapTerra Financial Group, Inc.
 (Exact Name of Issuer as specified in its charter)
 Colorado
    
    20-0003432(State or other jurisdiction 
of incorporation)
    
    (IRS Employer File Number)1440 Blake Street, Suite 310Denver, Colorado
    
    80202(Address of principal executive offices)
    
    (zip code)
 (303) 893-1003  (Registrants telephone number, including area code)    None    Common Stock, $0.001 per share par value
 o þ
 Yes o No þ.
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o (Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




---



##### 



FORM 10-K   INDEX
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    6Item 2. Property
    
    
    11Item 3. Legal Proceedings
    
    
    11Item 4. Submission of Matters to a Vote of Security Holders
    
    
    11PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    12Item 6. Selected Financial Data
    
    
    14Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 8. Financial Statements and Supplementary Data
    
    
    19Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    35Item 9A(T). Controls and Procedures
    
    
    35Item 9B. Other Information
    
    
    36PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    36Item 11. Executive Compensation
    
    
    38Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    39Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    40Item 14. Principal Accountant Fees and Services
    
    
    41Item 15. Exhibits Financial Statement Schedules
    
    
    42Signatures
    
    
    43Exhibit 21Exhibit 23.1Exhibit 31.1Exhibit 32.1
   2




---



##### Table of Contents



PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 NARRATIVE DESCRIPTION OF THE BUSINESS
 General
  Organization
   OPERATIONS
       3




---



##### Table of Contents



Funding:
  Subordinated Notes:
   Senior Credit Facilities:
 Vectra Bank:
   4




---



##### Table of Contents



United Western Bank:
   MARKETS
  CUSTOMERS AND COMPETITION
  EMPLOYEES
  GOVERNMENT REGULATION
   5




---



##### Table of Contents



ENVIRONMENTAL COMPLIANCE
  HOW TO OBTAIN OUR SEC FILINGS
  www.capterrafinancialgroup.com
 
 Item 1A. RISK FACTORS
      
    
    our ability to find suitable real estate projects; and
    
    our ability to generate sufficient revenues from those projects.
   6




---



##### Table of Contents




    
    increase our vulnerability to general adverse economic and industry conditions;
    
    require us to dedicate a substantial portion of our cash flow from operations
to payments on our indebtedness if we do not maintain specified financial
ratios, thereby reducing the availability of our cash flow for other purposes;
or
    
    limit our flexibility in planning for, or reacting to, changes in our business
and the industry in which we operate, thereby placing us at a competitive
disadvantage compared to our competitors that may have less indebtedness.
   7




---



##### Table of Contents




    
    incur additional indebtedness;
    
    make capital expenditures and other investments above a certain level;
    
    merge, consolidate or dispose of our assets or the capital stock or assets of any subsidiary;
    
    pay dividends, make distributions or redeem capital stock in certain circumstances;
    
    enter into transactions with our affiliates;
    
    grant liens on our assets or the assets of our subsidiaries; and
    
    make or repay intercompany loans.
          8




---



##### Table of Contents



9




---



##### Table of Contents



*
    
    actual or anticipated fluctuations in our operating results;*
    
    change in financial estimates by securities analysts or our failure to perform in line with such estimates;*
    
    changes in market valuations of other real estate oriented companies, particularly those that market
services such as ours;*
    
    announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships,
joint ventures or capital commitments;*
    
    introduction of technologies or product enhancements that reduce the need for our services;*
    
    the loss of one or more key customers; and*
    
    departures of key personnel.
        10




---



##### Table of Contents



ITEM 2. DESCRIPTION OF PROPERTY.
  
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   11




---



##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES.
 Market
  Closing Price2008
    
    High
    
    
    LowFirst Quarter
    
    $
    2.40
    
    
    $
    1.20Second Quarter
    
    $
    1.20
    
    
    $
    .80Third Quarter
    
    $
    2.00
    
    
    $
    .40Fourth Quarter
    
    $
    1.50
    
    
    $
    .90
 Closing Price2007
    
    High
    
    
    LowFirst Quarter
    
    $
    11.50
    
    
    $
    3.80Second Quarter
    
    $
    6.00
    
    
    $
    3.20Third Quarter
    
    $
    5.50
    
    
    $
    3.10Fourth Quarter
    
    $
    3.50
    
    
    $
    2.12
  Approximate Number of Holders of Common Stock
  The Securities Enforcement and Penny Stock Reform Act of 1990
    12




---



##### Table of Contents




    
    contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
 
    
    contains a description of the brokers or dealers duties to the
customer and of the rights and remedies available to the customer with
respect to a violation to such duties or other requirements of the
Securities Act of 1934, as amended;
 
    
    contains a brief, clear, narrative description of a dealer market, including bid and ask
prices for penny stocks and the significance of the spread between the bid and ask price;
 
    
    contains a toll-free telephone number for inquiries on disciplinary actions;
 
    
    defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
 
    
    contains such other information and is in such form (including language, type, size and format) as
the Securities and Exchange Commission shall require by rule or regulation;
  
    
    the bid and offer quotations for the penny stock;
 
    
    the compensation of the broker-dealer and its salesperson in the transaction;
 
    
    the number of shares to which such bid and ask prices apply, or other comparable information relating
to the depth and liquidity of the market for such stock; and
 
    
    monthly account statements showing the market value of each penny stock held in the customers account.
  Stock Transfer Agent
  Dividend Policy
   13




---



##### Table of Contents



ITEM
6. SELECTED FINANCIAL DATA.
  
 ITEM
7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  Forward-Looking Statements
  Overview and History
      14




---



##### Table of Contents



15




---



##### Table of Contents



Results of Operations
         Liquidity and Capital Resources
    16




---



##### Table of Contents



Recently Issued Accounting Pronouncements
  Seasonality
  Critical Accounting Policies
    17




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
   18




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders: 
CapTerra Financial Group,
Inc. 
Denver, Colorado We have audited the accompanying consolidated balance sheet of CapTerra
Financial Group, Inc. and subsidiaries (the “Company”) as of December 31, 2008, and the related
consolidated statements of operations, changes in shareholders’ equity, and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audit. 
  
We conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an
audit of its internal control over consolidated financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of CapTerra Financial Group, Inc. and
subsidiaries as of December 31, 2008, and the results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered
recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty. Ehrhardt Keefe Steiner & Hottman PC April 14, 2009 
Denver, Colorado




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders: 
Across America Real Estate
Corp. We have audited the accompanying consolidated balance sheet of Across
America Real Estate Corp. as of December 31, 2007, the related consolidated statements of operations, changes in
shareholders’ equity, and cash flows for the year ended December 31, 2007 and the related consolidated
statements of operations, changes in shareholders’ equity, and cash flows for the year ended December 31,
2006 (not separately included herein). These consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these consolidated financial statements
based on our audits. We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over consolidated
financial reporting. Our audit included consideration of internal control over consolidated financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over consolidated financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Across America Real Estate Corp. as of
December 31, 2007, and the results of their operations and their cash flows for the years ended December 31,
2007 and 2006, in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has incurred recurring losses, has used significant cash in support of its operating activities, has a
limited operating history and is reliant upon funding commitments from two significant shareholders. These conditions
raise doubt about the Company’s ability to continue as a going concern. Further information and
management’s plans in regard to this uncertainty are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty. As discussed in Note 18 to the consolidated financial statements, the
Company has restated its 2007 consolidated financial statements. Cordovano and Honeck LLP 
Englewood, Colorado 
March 25, 2008




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
 2008
    
    
    2007(As Restated)AssetsCash and Equivalents
    
    $
    2,383,740
    
    
    $
    2,035,620Deposits held by an affiliate
    
    
    
    
    
    
    940,880Accounts and notes receivable, net
    
    
    2,562,089
    
    
    
    2,156,959Property and equipment, net
of accumulated depreciation
    
    
    39,432
    
    
    
    112,918Real estate held for sale
    
    
    17,333,027
    
    
    
    14,398,602Construction in progress
    
    
    
    
    
    
    2,484,179Land held for development
    
    
    
    
    
    
    5,388,089Deposits and prepaids
    
    
    52,436
    
    
    
    48,451Total assets
    
    $
    22,370,724
    
    
    $
    27,565,698Liabilities and Shareholders DeficitLiabilitiesAccounts payable
    
    $
    38,414
    
    
    $
    269,726Accrued liabilities
    
    
    128,944
    
    
    
    409,066Dividends payable
    
    
    
    
    
    
    78,187Senior subordinated note payable, related parties
    
    
    20,802,247
    
    
    
    7,000,000Senior subordinated revolving note, related parties
    
    
    
    
    
    
    14,169,198Note payable
    
    
    7,330,652
    
    
    
    5,716,397Unearned Revenue
    
    
    
    
    
    
    522,841Total liabilities
    
    
    28,300,257
    
    
    
    28,165,415Minority interest
    
    
    
    
    
    
    4,594Shareholders deficitConvertible preferred stock, $.10 par value; 1,000,000 shares authorized,
517,000 shares issued and outstanding December 31, 2007, -0- shares
issued and outstanding December 31, 2008
    
    
    
    
    
    
    51,700Common stock, $.001 par value; 50,000,000 shares authorized,
8,018,313 shares issued and outstanding December 31, 2007
23,602,614 shares issued and outstanding December 31, 2008
    
    
    23,603
    
    
    
    8,018Additional paid-in-capital
    
    
    16,024,577
    
    
    
    6,448,417Accumulated deficit
    
    
    (21,977,713
    )
    
    
    (7,112,446
    )Total shareholders deficit
    
    
    (5,929,533
    )
    
    
    (599,717
    )Total liabilities and shareholders deficit
    
    $
    22,370,723
    
    
    $
    27,565,698
   19




---



##### Table of Contents



2008
    
    
    2007(As Restated)Revenue:Sales
    
    $
    4,381,723
    
    
    $
    17,171,469Financing activities
    
    
    104,925
    
    
    
    109,000Rental income
    
    
    293,476
    
    
    
    232,408Management fees
    
    
    19,584
    
    
    
    362,981Total revenue
    
    
    4,799,708
    
    
    
    17,875,858Operating expenses:Cost of sales
    
    
    4,349,585
    
    
    
    16,053,131Impairment loss on real estate
    
    
    8,030,002
    
    
    
    3,046,196Bad debt
    
    
    629,283
    
    
    
    258,601Conversion expense
    
    
    2,518,750
    
    
    
    Selling, general and administrative
    
    
    2,590,925
    
    
    
    3,134,835Total operating expenses
    
    
    18,118,545
    
    
    
    22,492,763Loss from operations
    
    
    (13,318,837
    )
    
    
    (4,616,905
    )Non-operating expense:Interest income
    
    
    9,543
    
    
    
    16,592Loss on fixed assets
    
    
    (50,265
    )
    
    
    Interest expense
    
    
    (1,324,805
    )
    
    
    (742,965
    )Other income (expense)
    
    
    (17,618
    )
    
    
    (1,570
    )Loss before income taxes and minority interest
    
    
    (14,701,982
    )
    
    
    (5,344,848
    )Income tax provision
    
    
    8,611
    
    
    
    289,683Loss before minority interest
    
    
    (14,710,593
    )
    
    
    (5,634,531
    )Minority interest
    
    
    
    
    
    
    433,360Net loss
    
    $
    (14,710,593
    )
    
    $
    (6,067,891
    )Preferred stock dividends
    
    
    (154,675
    )
    
    
    (310,201
    )Net loss available to common shareholders
    
    $
    (14,865,268
    )
    
    $
    (6,378,092
    )Basic and diluted loss per common share
    
    $
    (0.94
    )
    
    $
    (0.80
    )Basic and diluted weighted average common shares outstanding
    
    
    15,810,463
    
    
    
    8,018,313
   20




---



##### Table of Contents



Preferred Stock
    
    
    
    
    
    
    Common Stock
    
    
    AdditionalMinority
    
    
    
    
    
    Par
    
    
    
    
    
    
    Par
    
    
    Paid-in
    
    
    AccumulatedInterest
    
    
    Shares
    
    
    Value
    
    
    Shares
    
    
    Value
    
    
    Capital
    
    
    (Deficit)
    
    
    TotalBalance at December 31, 2006
    
    $
    16,946
    
    
    
    517,000
    
    
    $
    51,700
    
    
    
    8,018,313
    
    
    $
    8,018
    
    
    $
    6,321,780
    
    
    $
    (734,354
    )
    
    $
    5,664,090Minority interest at
December 31, 2007
    
    
    (12,352
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,352
    )Stock option compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126,637
    
    
    
    
    
    
    
    126,637Accrued preferred stock dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (310,201
    )
    
    
    (310,201
    )Net loss, year ending
December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,959,059
    )
    
    
    (3,959,059
    )Balance at December 31, 2007 as
originally stated
    
    $
    4,594
    
    
    
    517,000
    
    
    $
    51,700
    
    
    
    8,018,313
    
    
    $
    8,018
    
    
    $
    6,448,417
    
    
    $
    (5,003,614
    )
    
    $
    1,509,115Adjustments due to restatement (note 14)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,108,832
    )
    
    
    (2,108,832
    )Balance at December 31, 2007 as adjusted
    
    $
    4,594
    
    
    
    517,000
    
    
    $
    51,700
    
    
    
    8,018,313
    
    
    $
    8,018
    
    
    $
    6,448,417
    
    
    $
    (7,112,446
    )
    
    $
    (599,717
    )Minority interest at
December 31, 2008
    
    
    (4,594
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,594
    )Stock option compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,710
    
    
    
    
    
    
    
    48,710Accrued preferred stock dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (154,674
    )
    
    
    (154,674
    )Debt and equity recapitalization
    
    
    
    
    
    
    (517,000
    )
    
    
    (51,700
    )
    
    
    15,584,301
    
    
    
    15,585
    
    
    
    9,527,450
    
    
    
    
    
    
    
    9,491,335Net loss, for the year ending
December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,710,593
    )
    
    
    (14,710,593
    )Balance at December 31, 2008
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    23,602,614
    
    
    $
    23,603
    
    
    $
    16,024,577
    
    
    $
    (21,977,713
    )
    
    $
    (5,929,533
    )
   21




---



##### Table of Contents



2008
    
    
    2007(As Restated)Cash flows from operating activities:Net loss
    
    $
    (14,710,593
    )
    
    $
    (6,067,891
    )Adjustments to reconcile net income to net cash used by operating activities:Deferred income taxes
    
    
    8,611
    
    
    
    Depreciation
    
    
    84,882
    
    
    
    36,788Impairment of assets
    
    
    8,030,002
    
    
    
    3,046,196Allowance for bad debt and write-off of assets
    
    
    (9,014
    )
    
    
    258,601Note receivable allowance
    
    
    638,297
    
    
    
    Conversion expense
    
    
    2,518,750
    
    
    
    Stock option compensation expense
    
    
    48,709
    
    
    
    126,637Minority interest
    
    
    (4,594
    )
    
    
    (12,352
    )Conversion of dividendsChanges in operating assets and operating liabilities:Construction in progress
    
    
    2,484,179
    
    
    
    (2,913,063
    )Real estate held for sale
    
    
    (10,964,427
    )
    
    
    (11,970,630
    )Land held for development
    
    
    5,388,089
    
    
    
    6,429,119Accounts receivable
    
    
    (481,016
    )
    
    
    (2,125,129
    )Deposits and prepaids
    
    
    (3,985
    )
    
    
    17,879Accounts payable and accrued liabilities
    
    
    (511,435
    )
    
    
    348,425Income tax assets and liabilities
    
    
    (8,611
    )
    
    
    296,268Unearned revenue
    
    
    (522,841
    )
    
    
    385,173Net cash (used in) operating activities
    
    
    (8,014,997
    )
    
    
    (12,143,979
    )Cash flows from investing activities:Cash collections on notes receivable
    
    
    449,925
    
    
    
    1,348,513Issuance of notes receivable
    
    
    (62,442
    )
    
    
    (1,971,670
    )Cash paid for property and equipment
    
    
    (11,396
    )
    
    
    (63,153
    )Net cash provided by (used in) investing activities
    
    
    376,088
    
    
    
    (686,310
    )Cash flows from financing activities:Preferred stock dividends paid
    
    
    (78,187
    )
    
    
    (311,900
    )Proceeds from issuance of subordinated notes  related parties
    
    
    22,436,928
    
    
    
    19,558,482Repayment of subordinated notes  related parties
    
    
    (15,985,966
    )
    
    
    (10,987,381
    )Proceeds from issuance of notes payable
    
    
    3,991,948
    
    
    
    12,070,849Repayment of notes payable
    
    
    (2,377,693
    )
    
    
    (6,561,581
    )Net cash provided by financing activities
    
    
    7,987,030
    
    
    
    13,768,469Net change in cash
    
    $
    348,120
    
    
    $
    938,180Cash and cash equivalents, beginning of the period
    
    $
    2,035,620
    
    
    $
    1,097,440Cash and cash equivalents, end of the period
    
    $
    2,383,740
    
    
    $
    2,035,620Supplemental disclosure of cash flow information:Cash paid during the year for:Income taxes
    
    $
    7,522
    
    
    $
    Interest
    
    $
    1,406,786
    
    
    $
    273,625Supplemental disclosure of non-cash investing and financing activitiesPreferred stock dividends declared but not paid
    
    $
    6,817,913
    
    
    $
    78,187* Conversion of accrued dividends to common stock
    
    $
    154,674
    
    
    $
    * Conversion of subordinated debt and accrued interest to common stock
 *
    
    During 2008, the Company converted preferred stock of $51,700 and related party notes payable of
$6,972,587 into common stock. The Company issued 31,169 of common stock upon conversion.   22




---



##### Table of Contents



1) Nature of Organization and Summary of Significant Accounting Policies
 Organization and Basis of Presentation
  One-For-Two Reverse Stock Split
  Principles of Consolidation
  Name of Subsidiary Ownership
 Name of Subsidiary
    
    OwnershipState & 130th, LLC
    
    
    51
    %South Glen Eagles Drive, LLC
    
    
    51
    %Hwy 46 and Bluffton Pkwy, LLC
    
    
    51
    %AARD LECA LSS Lonestar, LLC
    
    
    51
    %AARD LECA VL1, LLC
    
    
    51
    %AARD-Charmar Greeley, LLC
    
    
    51
    %AARD-Charmar Greeley Firestone, LLC
    
    
    51
    %Buckeye AZ, LLC
    
    
    51
    %AARD 5020 Lloyd Expy, LLC
    
    
    51
    %AARD-Cypress Sound, LLC
    
    
    51
    %AARD NOLA St Claude, LLC
    
    
    51
    %AARD ORFL FD Goldenrod, LLC
    
    
    51
    %AARD Esterra Mesa 1, LLC
    
    
    51
    %CapTerra Fund I, LLC
    
    
    100
    %
   23




---



##### Table of Contents



Use of Estimates
   Cash and Cash Equivalents
  Accounts and Notes Receivable
   Property, Equipment and Depreciation
  Construction in Progress, Land Held for Development and Real Estate Held for Sale
   24




---



##### Table of Contents



Impairment and Disposal of Long-Lived Assets
  Fair Value of Financial Instruments
  Income Taxes
    Revenue Recognition
    Minority Interest in Consolidated Subsidiaries
  Earnings per Common Share
 
  25




---



##### Table of Contents



Going Concern
 
  Stock-Based Incentive Compensation Plans
 Share-Based Payment
 .
  Accounting for Stock Issued to Employees
  26




---



##### Table of Contents



Accounting Pronouncements
   Level 1:
    
    Quoted prices in active markets for identical assets or liabilities.Level 2:
    
    Quoted prices in active markets for similar assets and liabilities and inputs
that are observable for the asset or liability.Level 3:
    
    Unobservable inputs in which there is little or no market data, which require the
reporting entity to develop its own assumptions.
   2) Current Development Projects
  (3) Real Estate Held for Sale
    27




---



##### Table of Contents



(4) Related Party Transactions
  GDBA
    
    
    BOCO
    
    
    TotalSubordinated notes
    
    $
    7,000,000
    
    
    $
    13,265,000
    
    
    $
    20,265,000Accrued Interest
    
    
    211,726
    
    
    
    325,521
    
    
    
    537,247Total subordinated notes and interest
    
    $
    7,211,726
    
    
    $
    13,590,521
    
    
    $
    20,802,247
 GDBA Investments, LLC
          28




---



##### Table of Contents



BOCO Investments, LLC
    
        29




---



##### Table of Contents



(5) Notes Receivable and Development Deposits
  (6) Property and Equipment
  Equipment
    
    $
    23,277Furniture and fixtures
    
    
    17,396Computers and related equipment
    
    
    35,414Software and intangibles
    
    
    16,668$
    92,755less accumulated depreciation and amortization
    
    
    (53,323
    )$
    39,432
  (7) Shareholders Equity
 Preferred Stock
   30




---



##### Table of Contents



Stock Based Compensation
     Options OutstandingWeighted
    
    
    WeightedAverage
    
    
    Remaining
    
    
    AggregateNumber
    
    
    Exercise
    
    
    Contractual
    
    
    Intrinsicof Options
    
    
    Price
    
    
    Term
    
    
    ValueBalance, at December 31,
2007
    
    
    214,375
    
    
    
    3.44
    
    
    
    3.9
    
    
    
    Activity during 2008:Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired/Cancelled
    
    
    (214,375
    )
    
    
    3.44
    
    
    
    2.9Forfeited
    
    
    Exercised
    
    
    Balance, at December 31,
2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  31




---



##### Table of Contents



(8) Income Taxes
  2008
    
    
    2007Current:Federal
    
    $
    
    
    
    $
    State
    
    
    9,000
    
    
    
    9,000
    
    
    
    Deferred:Federal
    
    
    
    
    
    
    253,000State
    
    
    
    
    
    
    37,000
    
    
    
    290,000Income tax expense
(benefit)
    
    $
    9,000
    
    
    $
    290,000
  2008
    
    
    2007Computed expected tax expense (benefit)
    
    $
    (4,999,000
    )
    
    $
    (1,965,000
    )Increase (reduction) in income taxes resulting from:State and local income taxes, net of federal impact
    
    
    (726,000
    )
    
    
    (289,000
    )Nondeductible differences
    
    
    2,000
    
    
    
    5,000Change in valuation allowance
    
    
    4,731,000
    
    
    
    2,539,000Preferred Stock Conversion Expense
    
    
    982,000
    
    
    
    Terminated Stock Option Plan
    
    
    19,000
    
    
    
    Income tax expense (benefit)
    
    $
    9,000
    
    
    $
    290,000
  2008
    
    
    2007Impairment of asset
    
    $
    3,910,000
    
    
    $
    802,000Net operating loss and carry-forwards
    
    
    3,147,000
    
    
    
    1,849,000Allowance for Doubtful Accounts
    
    
    305,000
    
    
    
    Partnership income
    
    
    130,000
    
    
    
    130,000Origination Fee Income
    
    
    (85,000
    )
    
    
    (85,000
    )Fixed Assets
    
    
    (3,000
    )
    
    
    (23,000
    )Other temporary differences
    
    
    (67,000
    )
    
    
    (67,000
    )7,337,000
    
    
    
    2,606,000Valuation Allowance
    
    
    (7,337,000
    )
    
    
    (2,606,000
    )Total net deferred tax assets
    
    $
    
    
    
    $
    
        32




---



##### Table of Contents



(9) Minority Interests
  Balance
    
    
    Earnings allocated to
    
    
    Earnings disbursed/
accrued for
    
    
    BalanceDecember 31, 2007
    
    
    Minority Interest
    
    
    Minority Interest
    
    
    December 31, 2008Cypress
    
    $
    4,594
    
    
    $
    
    
    
    $
    4,594
    
    
    $
    Total
    
    $
    4,594
    
    
    $
    
    
    
    $
    4,594
    
    
    $
    
 (10) Concentration of Credit Risk for Cash
  (11) Notes Payable
 Vectra Bank Senior Credit Facility:
    United Western Bank Senior Credit Facility
   33




---



##### Table of Contents



(12) Impairment of Assets
    (13) Notes Receivable
  (14) Restatement
    34




---



##### Table of Contents



AsPreviouslyReported
    
    
    Adjustment
    
    
    As RestatedDeferred tax asset
    
    $
    1,143,334
    
    
    $
    (1,143,334
    )
    
    $
    Current tax asset
    
    $
    965,498
    
    
    $
    (965,498
    )
    
    $
    Total assets
    
    $
    29,674,530
    
    
    $
    (2,108,832
    )
    
    $
    27,565,698Total shareholders equity
    
    $
    1,509,115
    
    
    $
    (2,108,832
    )
    
    $
    (599,717
    )Net loss
    
    $
    (3,959,059
    )
    
    $
    (2,108,832
    )
    
    $
    (6,067,891
    )Basic and diluted loss
per common share
    
    $
    (0.54
    )
    
    $
    0.26
    
    
    $
    (0.80
    )
 
 ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A(T). CONTROLS AND PROCEDURES.
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Annual Report on Internal Control Over Financial Reporting.
   35




---



##### Table of Contents



Inherent Limitations Over Internal Controls
  Changes in Internal Control Over Financial Reporting.
  Attestation Report of the Registered Public Accounting Firm.
  
 ITEM
9B. OTHER INFORMATION.
  
 PART III
 
 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
  NAME
    
    AGE
    
    POSITION HELDJames W Creamer III
    
    
    44
    
    
    President and Chief Executive Officer
Treasurer and Chief Financial OfficerJoni K. Troska
    
    
    49
    
    
    SecretaryG. Brent Backman
    
    
    68
    
    
    DirectorEric Balzer
    
    
    60
    
    
    DirectorJoseph C. Zimlich
    
    
    49
    
    
    Director
  Mr. Creamer
  36




---



##### Table of Contents



Ms. Troska
 Mr. Backman
 Mr. Balzer
 Mr. Zimlich
 Compliance with Section 16(a) of the Securities Exchange Act of 1934
    37




---



##### Table of Contents



ITEM
11. EXECUTIVE COMPENSATION.
  NonqualifiedNon-Equity
    
    
    DeferredStock
    
    
    Option
    
    
    Incentive
    
    
    Compensation
    
    
    All OtherName & Principal Position
    
    
    
    
    
    Salary ($)
    
    
    Bonus ($)
    
    
    Awards ($)
    
    
    Awards ($)
    
    
    Compensation ($)
    
    
    Earnings ($)
    
    
    Compensation ($)
    
    
    Total ($)Peter Shepard (1)
    
    
    2008
    
    
    
    172,333
    
    
    
    35,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207,333James W. Creamer III (2)
    
    
    2008
    
    
    
    120,000
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135,000Chief Financial Officer
    
    
    2007
    
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,0002006
    
    
    
    101,667
    
    
    
    
    
    
    
    
    
    
    
    94,328
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195,995Ann L. Schmitt (3)
    
    
    2008
    
    
    
    43,234
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,234Chief Executive Officer
    
    
    2007
    
    
    
    235,000
    
    
    
    80,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    315,0002006
    
    
    
    91,733
    
    
    
    
    
    
    
    
    
    
    
    235,820
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327,553Terry W. Thompson (4)
    
    
    2008
    
    
    
    126,929
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126,929Senior VP Operations
    
    
    2007
    
    
    
    127,500
    
    
    
    
    
    
    
    
    
    
    
    53,594
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,094
 (1)
    
    Mr. Shepard became our President February 27, 2008 and received a salary of $235,000 and was
eligible for an annual bonus by our Board of Directors. In December 2008 Mr. Shepard was
granted a bonus by our Board of Directors of $35,000. Mr. Shepard resigned on January 20,
2009.(2)
    
    Mr. Creamer, our Vice President, Treasurer and Chief Financial Officer receives a salary of
$120,000 per year and is eligible for an annual bonus by our Board of Directors. In December
2008 Mr. Creamer received a bonus of $15,000. On November 8, 2006, Mr. Creamer was granted
options to purchase 100,000 shares of common stock at $1.65 per share. The options have a
five year term and a vesting schedule of 25% per year over the next five years. These options
were cancelled with the termination of our 2006 Equity Compensation Plan effective December 4,
2008.(3)
    
    Ms. Schmitt became our President and CEO on August 7, 2006 and received a salary of $235,000
per year and is eligible for an annual bonus by our Board of Directors. On November 8, 2006,
Ms Schmitt was granted options to purchase 250,000 shares of common stock at $1.65 per share.
The options have a five year term and a vesting schedule of 25% per year over the next four
years. In addition as part of her employment agreement, Ms. Schmitt received an $80,000 bonus
on March 30, 2007. Ms. Schmitt resigned on February 27, 2008(4)
    
    Mr. Thompson our Senior Vice President of Operations, received a salary of $170,000 per year
and is eligible for an annual bonus by our Board of Directors. At the time he joined the
Company, Mr. Thompson was also granted options to purchase 40,000 shares of common stock at
$1.90 per share. Mr. Thompson resigned from his position on August 31, 2008      38




---



##### Table of Contents



DIRECTOR COMPENSATION
 NonqualifiedNon-Equity
    
    
    DeferredFees Earned or
    
    
    Stock
    
    
    Option
    
    
    Incentive Plan
    
    
    Compensation
    
    
    All OtherName
    

Paid in Cash ($)
    
    
    Awards ($)
    
    
    Awards ($)
    
    

Compensation ($)
    
    
    Earnings ($)
    
    

Compensation ($)
    
    
    Total ($)G. Brent Backman
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000Eric Balzer
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000Joseph Zimlich
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  Amount andNature ofBeneficial
    
    
    Percent ofName and Address of Beneficial Owner
    
    Ownership (1)(2)
    
    
    ClassG. Brent Backman (3)
    
    
    10,922,046
    
    
    
    46.3
    %1440 Blake Street, Suite 310
Denver, Colorado 80202BOCO Investments, LLC (4)
    
    
    9,736,379
    
    
    
    41.3
    %103 West Mountain Ave.
Fort Collins, Colorado, 80524Sarmat, LLC (5)
    
    
    1,645,750
    
    
    
    7.0
    %103 West Mountain Ave.
Fort Collins, Colorado, 80524James W Creamer III
    
    
    25,400
    
    
    
    0.1
    %1440 Blake Street, Suite 310
Denver, Colorado 80202Joni K. Troska (6)
    
    
    16,000
    
    
    
    0.1
    %1440 Blake Street, Suite 310
Denver, Colorado 80202Joseph Zimlich (7)
    
    
    344,869
    
    
    
    1.5
    %103 West Mountain Ave.
Fort Collins, Colorado, 80524Eric Balzer (8)
    
    
    112,500
    
    
    
    0.5
    %1440 Blake Street, Suite 310
Denver, Colorado 80202All Officers and Directors
    
    
    11,420,815
    
    
    
    48.4
    %As a Group (five persons)
  39




---



##### Table of Contents



(1)
    
    All ownership is beneficial and of record, unless indicated otherwise.(2)
    
    Beneficial owners listed above have sole voting and investment power with
respect to the shares shown, unless otherwise indicated.(3)
    
    A total 10,922,046 shares are owned of record by GDBA Investments, LLC, which is controlled by
Mr. Backman. A total of 5,391,329 were acquired on June 30, 2008 as a result of the conversion of
250,000 shares of convertible preferred stock and $3 million in subordinated debt converted to
common stock. A total of 45,000 shares are owned in the name of adult children of the Mr.
Backman, for which GDBA and Mr. Backman disclaim beneficial ownership.(4)
    
    A total of 9,736,379 shares are owned by BOCO Investments, LLC which were acquired on June
30, 2008 as a result of the conversion of 250,000 shares of convertible preferred stock and $3
million in subordinated debt converted to common stock.(5)
    
    A total of 1,045,250 of these shares are owned of record. A total of 600,500 shares are owned
in the name of family members of the affiliate of this entity.(6)
    
    Includes 10,000 shares owned of record by Ms. Troska and 6,000 shares owned of record by Ms.
Troskas husband, for which she disclaims beneficial ownership.(7)
    
    A total of 344,869 shares are owned by Mr. Zimlich, 316,594 of which were acquired on June
30, 2008 as a result of the conversion of 58,000 shares of convertible preferred shares.(8)
    
    A total of 75,000 shares are owned in the name of an affiliated entity. A total of 37,500
shares are owned in the name of Mr. Balzers son.  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 GDBA Investments, LLC
       40




---



##### Table of Contents



BOCO Investments, LLC
    ,
  
 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   41




---



##### Table of Contents



ITEM 15. EXHIBITS FINANCIAL STATEMENT SCHEDULES.
     ExhibitNumber
    
    Description3.1
    *
    
    Articles of Incorporation3.2
    *
    
    Bylaws3.3
    *
    
    Articles of Amendment to Articles of Incorporation10.26
    *
    
    Amendment to Subordinated Note, GDBA, Dated March 25, 200810.27
    *
    
    Amendment to Revolving Note, GDBA, Dated March 25, 200810.28
    *
    
    Amendment to Subordinated Note, BOCO, Dated March 25, 200810.29
    *
    
    Amendment to Revolving Note, BOCO, Dated March 25, 200821
    *
    
    List of Subsidiaries.31.1
    *
    
    Certification of Chief Executive Officer/ Chief Financial Officer
pursuant to Rule 13a-14(a)/15(d)-14(a)32.1
    *
    
    Certification of Chief Executive Officer/ Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 *
    
    Previously filed(b)
    
    Reports on Form 8-K.   42




---



##### Table of Contents



CAPTERRA FINANCIAL GROUP, INC.Dated: APRIL 15, 2009
    By:
    /s/ James W Creamer IIIJames W Creamer IIIPresident, Chief Executive Officer,
Treasurer, Chief Financial Officer  Dated: APRIL 15, 2009
    By:
    /s/ Eric BalzerEric BalzerDirectorDated: APRIL 15, 2009
    By:
    /s/ G. Brent BackmanG. Brent BackmanDirectorDated: APRIL 15, 2009
    By:
    /s/ Joseph ZimlichJoseph ZimlichDirector  43




---



##### Table of Contents



ExhibitNumber
    
    Description3.1
    *
    
    Articles of Incorporation3.2
    *
    
    Bylaws3.3
    *
    
    Articles of Amendment to Articles of Incorporation10.26
    *
    
    Amendment to Subordinated Note, GDBA, Dated March 25, 200810.27
    *
    
    Amendment to Revolving Note, GDBA, Dated March 25, 200810.28
    *
    
    Amendment to Subordinated Note, BOCO, Dated March 25, 200810.29
    *
    
    Amendment to Revolving Note, BOCO, Dated March 25, 200821
    
    
    List of Subsidiaries.31.1
    
    
    Certification of Chief Executive Officer/ Chief Financial Officer
pursuant to Rule 13a-14(a)/15(d)-14(a)32.1
    
    
    Certification of Chief Executive Officer/ Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 *
    
    Previously filed  44